There's a New APP in Town

CIOs know about ERP, CRM, SCM and other enterprisewide, energy-sapping, three-letter acronyms. Well, it's now time to come up to speed on another: PLM, short for product lifecycle management. Even in this downturn, manufacturing companies across myriad industries are investing in PLM application suites - to the tune of $US2.3 billion this year, according to AMR Research. Why are these pioneers willing to take the risk, particularly when they've been burned before on comparable, large-scale software rollouts? Because they see PLM's potential to vastly improve a company's ability to innovate, get products to market and reduce errors.

PLM applications hold the promise of seamlessly flowing all of the information produced throughout all phases of a product's life cycle to everyone in an organisation, along with key suppliers and customers. An automotive company or aerospace manufacturer, for example, can shrink the time it takes to introduce new models in a number of ways. Product engineers can dramatically shorten the cycle of implementing and approving engineering changes across an extended design chain. Purchasing agents can work more effectively with suppliers to reuse parts. And executives can take a high-level view of all important product information, from details of the manufacturing line to parts failure rates culled from warranty data and information collected in the field.

Getting to this promised land, however, takes a lot of work on the part of the CIO - perhaps even more than with other enterprise application deployments. Unlike ERP packages, which are typically used to replace various outdated systems, PLM requires integrating many siloed databases and getting people from different business functions to work together better. PLM is not so much a system as a strategy - for integrating and sharing information about products between applications and among different constituencies such as engineering, purchasing, manufacturing, marketing, sales and aftermarket support. Because PLM grew out of product design software, CIOs sometimes defer on it to engineering executives, who traditionally have managed their own technology rollouts. While this hands-off approach works for choosing point solutions like CAD tools, it doesn't fly for a companywide, integrated platform. Different business functions generate product data and deal with it in disparate ways. Manufacturing and engineering, for instance, work with different versions of a bill of materials - a listing of parts and subassemblies making up a product - as does purchasing, which also relies on approved vendor lists and catalogues.

For PLM to bear fruit, CIOs need to address touchy issues such as establishing data standards and designing a corporate integration architecture so that formerly fragmented information can be served up to individuals in a format they can use. That way, people in various divisions are equipped to make key decisions - such as what products to introduce or what features to include in a product's design phase - when they are most cost-effective, rather than midstream in the parts procurement stage or even during manufacturing.

Without the CIO's early guidance on product lifecycle management, on the other hand, "there's a much higher probability that each functional tower would decide on what's best for them rather than searching for a global solution," says Dennis Charest, vice president of e-business and IT at Hamilton Sundstrand, a $US3.4 billion aerospace and industrial products subsidiary of United Technologies. The result of decentralised decision making would be a standards mess and a giant cleanup job for you-know-who.

CIOs can best avoid this trap by acting as both chief architects for the PLM strategy and leaders of change. The first task is to draw up the technology road map, devising the infrastructure to support cross-application integration and helping select the right vendor. The next job is to lead the troops, with the help of key business execs, through the laborious process of changing the way they work. Finally, given the constraints of today's economy, responsibility falls to CIOs to identify the areas where PLM can deliver the most immediate results. "This is yet another thing that's going to cost big money," says Kevin O'Marah, vice president of PLM at AMR Research. "It's up to the CIO to watch out for where PLM can really be meaningful."

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